The head of the International Monetary Fund (IMF) Christine Lagarde is under investigation over 'negligence' in her role as finance minister under French President Nicolas Sarkozy's government in awarding 400 million euros to a businessman Bernard Tapie in 2008.

French authorities have formally started the investigation against Lagarde who denies all charges against her.

Tapie who was a majority shareholder in sports company Adidas, had sold the shares in 1993 to become a cabinet minister in Francois Mitterrand's Socialist government, reported the BBC.

Tapie had sued Credit Lyonnais over sales management and alleged that the partly state-owned bank had committed a fraud against him.

According to reports, Tapie had also supported Sarkozy in the 2007 elections.